Direct Answer
MCA underwriting evaluates bank deposits (volume, consistency, NSF frequency, average daily balance), personal credit (FICO, public records), and business profile (industry, time in business, existing debt). The outputs are: approved advance amount (75-150% of monthly average deposits), factor rate (1.10-1.49 depending on risk profile), and holdback percentage (8-18%). No collateral is pledged; the advance is secured by future receivables.
Contents
2026 Baseline Pre-Underwriting Criteria
Before any deeper scoring happens, every application is checked against a simple floor. Below these numbers, most MCA funders won't consider the file at all; above them, you move into the scoring model described in the rest of this guide.
| Criteria | Baseline | Why it matters |
|---|---|---|
| Minimum monthly revenue | $4,000-$6,000/month | Below this, deposit volume is too thin to support a meaningful advance amount or daily/weekly holdback. |
| Account ending balance | No T.A.G. minimum | T.A.G. does not set a balance floor, does not screen a file on cash flow, and does not decline anyone over low, uneven, or negative months. Your balances are read by the funding provider as part of its own review, alongside deposit volume and NSF history, and it makes that determination. |
| Time in business | 6+ months | Funders need a repeatable revenue pattern, not a snapshot. Under 6 months, options narrow significantly. |
| Bank statement history | 4 consecutive months (minimum), 6 preferred | Four consecutive business bank statements are enough to submit a file; six are requested because a longer unbroken window reads better, but an otherwise complete application is never held back waiting on months five and six. |
| Credit check | Soft pull for initial review | Checking your options doesn't affect your score. A hard pull typically occurs later, before final approval; see the FAQ below for what that means for your credit. |
For renewal/add-on eligibility on an existing advance (not a new application), see the MCA renewal guide: most funders offer a renewal once roughly 50-75% of the original advance has been repaid cleanly, not a fixed early-paydown percentage.
The Three Underwriting Inputs
Input 1: Bank Statements (Most Important)
The bank statement analysis is the core of MCA underwriting. Underwriters look at:
- Total 6-month deposit volume: determines the maximum advance amount
- Average daily balance: signals cash flow quality and buffer
- NSF/returned item count: the strongest negative risk signal
- Deposit day count: how many days per month show deposit activity
- Existing MCA holdbacks: visible as recurring ACH debits
- Deposit trend: growing, flat, or declining over the 6-month statement window
Input 2: Credit Profile
A personal credit pull (soft during initial review, hard before final approval) checks:
- Personal FICO score (minimum 500)
- Derogatory marks: bankruptcy, judgments, collections, late payments
- Personal debt load: existing personal loans, credit card balances
- No major public records against the business entity
Input 3: Business Profile
- Time in business: 6-month minimum; 2+ years = most favorable
- Industry: Some industries carry higher default rates and receive higher base factor rates (restaurants, retail, bars) vs. lower-risk (healthcare, professional services, utilities)
- Entity type: LLC and corporations are preferred over sole proprietorships for larger advances
- Owner age/stability: Some underwriters look at business owner tenure and address stability
How Factor Rates Are Determined
Factor rates are not arbitrary; they're calculated from a risk scoring model. Each risk factor adjusts the base rate up or down. For current market-wide averages and trend data, see the 2026 MCA Market Report.
Base Rate
1.18-1.22
Starting point for a clean, qualified applicant with no negative signals
FICO 500-549
+0.08-0.12
Lower FICO adds risk premium to base rate
NSF 4-7/month
+0.05-0.10
Moderate NSF frequency adds risk premium
Second position
+0.10-0.20
Existing advance increases risk of non-repayment
Industry risk
+0.00-0.08
Higher-default industries carry an industry premium
Short history (6-12 mo)
+0.04-0.08
Limited operating history increases uncertainty
Factor Rate Reference Table
| Profile Type | Factor Rate Range | Key Characteristics |
|---|---|---|
| Tier A (Excellent) | 1.10-1.18 | 680+ FICO, 2+ years, zero NSFs, strong consistent deposits, no existing MCA |
| Tier B (Good) | 1.18-1.25 | 580-679 FICO, 1-2 years, 0-2 NSFs, consistent deposits |
| Tier C (Standard) | 1.25-1.35 | 530-579 FICO, 6-12 months, moderate NSFs or one existing position |
| Tier D (Elevated Risk) | 1.35-1.45 | 500-529 FICO, recent BK, multiple NSFs, second position, or high-risk industry |
| Tier E (High Risk) | 1.45-1.49 | Minimum qualifying threshold: borderline approval factors |
How Holdback Percentage Is Set
The holdback percentage (the daily percentage of deposits deducted for repayment) is calculated to produce a repayment term of approximately 4-10 months for most positions. The lender wants repayment within a reasonable window: not so fast that the business can't sustain it, not so slow that the lender's capital is tied up too long.
The formula is approximately:
- Target repayment term: 6 months
- Business average daily deposits: $3,000
- Total repayment obligation: $32,000 advance × 1.25 factor = $40,000
- Required daily deduction: $40,000 ÷ (6 months × 22 business days) = $303/day
- Holdback %: $303 ÷ $3,000 = 10.1%
Actual holdback rates range from 8-18%, with higher rates on smaller advances (shorter terms) or higher-risk profiles.
How to Improve Your Underwriting Profile Before Applying
- Wait 180+ clean days: If you have recent NSFs, roughly six months of clean banking will move them out of the primary 6-month underwriting window
- Build your average daily balance: The difference between a $400 average daily balance and a $4,000 average daily balance is significant to underwriters
- Pay down existing debt: A first MCA that's 70% repaid looks very different than one that's 20% repaid; it signals responsible debt management
- Apply in a strong revenue stretch: If one of the last 6 months was unusually weak, wait until it falls outside the 6-month window
- Check and dispute credit errors: Free your FICO from incorrectly reported derogatory marks before applying
Apply With a Complete Understanding of the Process
500 FICO minimum. No hard pull at application on initial review. Review begins as soon as your file is complete.
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FAQ
- Is MCA underwriting the same at every lender?
- No; each MCA provider has its own underwriting model, risk appetite, and industry preferences. One provider may specialize in restaurants and have more favorable terms for food service; another may be more aggressive on second positions. This is why comparing offers from multiple providers is valuable: the same application may produce different terms at different sources.
- Does applying for MCA hurt my credit score?
- The initial review uses a soft pull (no impact). A hard pull occurs later in the process before final approval. If you submit to multiple providers simultaneously, each hard pull can impact your score, typically 2-5 points per hard inquiry. This is why submitting to multiple providers within a short window (rate shopping) is better than staggered multiple applications spread over weeks.
- What happens if my application is declined?
- Ask for the specific decline reason; reputable providers will tell you. Common decline reasons: FICO under 500, chronic NSF pattern, insufficient deposit history, active bankruptcy, or too many existing positions. Most decline reasons are addressable over time. A decline today doesn't mean a decline in 90 days with a cleaner statement window.
- What is the minimum monthly revenue to qualify for MCA underwriting?
- The baseline floor most funders check first is $4,000-$6,000 in average monthly revenue, plus at least 6 months in business. There is no account balance minimum attached to that: T.A.G. does not screen files on balances or cash flow, and the funding provider makes that determination. Meeting the floor doesn't guarantee approval; it just means the file is eligible to be scored on the factors described in this guide.
- How many months of bank statements do I need to submit?
- T.A.G.'s underwriting baseline requires exactly 6 consecutive months of business bank statements. This now aligns with the 6-month time-in-business minimum: funders review your full 6-month operating history via bank statements, not a shorter 3-month snapshot.
- How does MCA underwriting work?
- MCA underwriting evaluates three primary inputs: bank statements (deposit volume, average daily balance, NSF frequency), credit profile (personal FICO, public records), and business profile (time in business, industry, entity type). The output is an approval decision plus an offer: advance amount, factor rate, holdback percentage, and estimated term. No collateral is assessed because there is none; the advance is secured only by future receivables.
- What determines my MCA factor rate?
- Factor rates are set based on perceived repayment risk. Lower risk = lower factor rate. The primary risk signals: (1) FICO score, higher is better; (2) NSF frequency, more NSFs signal higher risk; (3) average daily balance, lower balance signals tighter margins; (4) deposit consistency, irregular deposits suggest volatile revenue; (5) existing positions, more existing debt means higher risk; (6) industry, some industries have higher risk profiles than others.
- Can I negotiate my MCA factor rate?
- Partially. The initial offer is generated by the underwriting model. You can sometimes negotiate with a human review if: you have offsetting positive factors (strong deposits, long history), you have competing offers from other providers, or you can provide additional documentation that addresses a concern. The most reliable way to get a lower rate is to improve the underlying risk profile: better FICO, fewer NSFs, stronger deposits.
- How long does MCA underwriting take?
- Most MCA applications receive a decision after submitting a complete initial file (a completed application plus 6 consecutive months of bank statements; nothing more is required to get a decision). The funding provider sets the actual decision timeline after reviewing a complete application. A government ID and voided check are collected later, at signing. Incomplete applications or requests for additional documentation can delay the process.